Everything Sony Touches Turns To Mediocrity

Sep. 2.11 | About: Sony Corporation (SNE)

Of all the tech companies I follow, Sony (NYSE:SNE) is the most clueless. The reason is simple: It fails to understand synergy.

Sony remains the only major tech company that's not run by a tech executive. Instead the CEO is Howard Stringer, former head of CBS (NYSE:CBS), a content guy. Stringer, like his Japanese predecessors, persists in believing there is some magical link between creating movies or TV shows and making the devices they play on.

There isn't. There never was. That's not to say there aren't synergies in technology. But they're between and among technologies, not between technology and content. There's synergy, for instance, between hardware and software. But Sony tablets are Android-based – Google (NASDAQ:GOOG) will do as well in that after-market as Sony will.

There's growing evidence of synergy between online stores and tech hardware. Sony's ebook readers are getting good reviews – but its e-book store is considerably weaker than those of rivals Barnes & Noble (BN) and Amazon (NASDAQ:AMZN).

The PlayStation video game system does sell millions of units, but its all-in-one design made it vulnerable to any dedicated system with a lower price, like Nintendo's (OTCPK:NTDOF) Wii. It lacks an exciting new interface like Microsoft's (NASDAQ:MSFT) Kinect, and when it introduced some hot new 3-D goggles this week there was no connection to the game machine.

The company has remained stuck in slow-growth, even no-growth markets like PCs and cameras, long after rivals abandoned them. Everything Sony touches in tech turns to mediocrity. They got into movie downloads. Good. Then got overtaken by -- wait for it -- Wal-Mart (NYSE:WMT). Really? Really.

GadgetBox' summary of the company's products speaks to me about the company as a whole:

It's behind on TV sales; it has no phone or PC strategy to speak of; it's behind Apple, Amazon and pretty much everybody else in media distribution; and has yet to make amends for the personal security nightmare it dragged its devoted gamers through this year.

Sony has reported net losses for three years running now, despite owning successful TV and movie operations, despite even owning an insurance company. Its shares are actually selling for less than they were at the bottom of the dot-com bust. Unless the company is broken up in some very creative way, it's something you want to stay well away from.

They can start by firing Howard Stringer and bringing on Carl Icahn.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.